4:42 PM Jul 20, 1995

FINANCIAL SERVICES DEAL NOT TILL NEXT WEEK?

Geneva 20 July (Chakravarthi Raghavan) -- The European attempt at the World Trade Organization to get a financial services accord, to run through 31 December 1997, may not be tied up this week, as had been hoped earlier, trade diplomats said Thursday.

The EU has sought to put together a WTO/GATS agreement, with key countries scheduling their best offers on the table on an MFN basis, ignoring the US stand of entering MFN reservations, but for an interim period till end of 1997, with all countries having an option at that time to reassess their positions.

EU Trade Commissioner Leon Brittan hoped to have such an accord by the time he goes to Washington for talks there on Monday.

However, Japan, said to be crucial for such a deal, is yet to make up its mind and will be unable to signify its position Friday evening at the scheduled meeting of the Financial Services Committee. There are apparently differences on this between the Japanese Foreign Office, the international wing of the Japanese finance ministry, and Japan's finance ministry dealing with banking and other domestic sectors.

There is an election for the Japanese Senate Sunday, and though this is not an issue, it may not be easy to concentrate minds of decision-makers before then, some trade sources suggest.

But some others, who agreed with the EU's proposal, are apparently raising questions about the fact that the EU has for its part got a direct assurance and deal with the US about the treatment of its financial services enterprises, on an equal footing with US enterprises, on the US market.

There is a view that Japan too is looking for some similar assurances from the US.

The United States has been privately telling key countries and capitals that it was not their intention to discriminate against any country, but that they were entering a MFN reservation to preserve their position.

However, given the stance of the administration, and the Rambo views in Congress, the US taking the bilateral and S.301 line to extract concessions from others under threat of 'trade sanctions' cannot be ruled out.

The EU view that with a multilateral agreement, Japan or any of the key countries would be better off against a US bilateral pressure or unilateral sanction is becoming less and less credible.